A search for enzymatic activities in cells which hydrolyze protein phosphotyrosine residues was carried out utilizing a novel phosphotyrosyl protein substrate, phosphotyrosyl glutamine synthetase. Data suggest that alkaline phosphatase activities in cells do not play a role in the regulation of the phosphotyrosine content of proteins. A potent protein phosphotyrosyl phosphatase (PTPase) activity in both normal cells and malignant cells was observed. The PTPase activity in Ehrlich Ascites Tumor cells has been semipurified and found to elute as a single species on DEAE cellulose chromatography. This activity appears to be specific for proteins and distinct from protein phosphatase activities which dephosphorylate phosphoserine and phosphothreonine residues.